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Coronavirus: Europe ramps up support for ailing firms

European authorities are increasing efforts to try to stave off the economic effects of coronavirus.

The European Union (EU) will put a package of measures in place including a €37bn euro (£33bn) investment initiative.

And German finance minister Olaf Scholz said his country could part nationalise firms to tackle the crisis.

Norway suspended some airline taxes as global aviation body IATA said carriers could fold over the next few months.

Markets have become increasingly volatile as the impact of the spread of the coronavirus becomes more pronounced. Global stocks soared on Friday, after record falls on Thursday.

Concerns over the economic effects of the pandemic led to a number of actions by European authorities on Friday.

Bloc response

European Commission President Ursula von der Leyen said the EU response package will include giving member states flexibility on budget deficits and state aid.

The EU will also guarantee €8bn in loans to 100,000 firms to support the corporate sector, she said.

“I am convinced that the European Union can withstand this shock,” she said. “But each member state needs to live up to its full responsibility and the European Union as a whole needs to be determined, coordinated and united.”

Ms von de Leyen added that the Commission wanted to ensure “necessary supplies to our health systems” and to support people’s incomes and jobs.

Norwegian Air plane

Meanwhile, German finance minister Olaf Scholz said Germany would give tax relief and deferrals to firms which would take billions from the state treasury, and could take bail out ailing firms by taking stakes in them.

“The German government… all agreed together that we will use all means to ensure we can tackle this crisis,” Mr Scholz said.

“We will every available tool at our disposal to get through these difficult times with all our economic possibilities and to make sure we come out of this situation in good shape.”

Ailing airlines

Airlines have been hit by a slump in demand caused by the coronavirus pandemic, with thousands of flight cancellations as the virus spread.

On Thursday, Norwegian Air said it would suspend half of its staff and cancel 4,000 flights because of the outbreak, with the situation exacerbated by sweeping travel restrictions between the US and Europe.

On Friday, Norway’s government suspended some fees and taxes levied on airlines and said it is in talks with the country’s aviation industry on further measures to help alleviate the situation, finance minister Jan Tore Sanner said.

“We are well informed of the wishes of the airline industries… I don’t want to speculate on what measures could be implemented,” said finance minister Jan Sanner said.

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The chief executive of the International Air Transport Association, Alexandre de Juniac, said more airlines could collapse if the coronavirus crisis last more than another two to three months.

Mr de Juniac said on Friday that global revenue losses would be “probably above” $113bn that it estimated a week ago, before the Trump administration’s announcement of US travel curbs on passengers from much of continental Europe.

US response

Meanwhile, US Treasury Secretary Steven Mnuchin said he expected the US economic hit from the coronavirus outbreak to be short-term, and that the Trump administration was keeping its options open for any other future steps that may be needed.

Mr Mnuchin said the US Treasury and the Federal Reserve were working to keep markets open and to provide “unlimited liquidity.”

He also said negotiations with Democrats over an economic relief package were also going well. “We’re going to look at every tool in the toolbox,” he said.

BBC

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